… the dollar has seen a dramatic rebound since the first week of September after hitting a 2017 low at the start of the month. But how much longer can this recent spike persist?

That’s what Bloomberg’s FX strategist David Finnerty seeks to answer in his latest Macro View note, in which he says that the dollar’s “amazing fourth-quarter comeback — the sort that would leave sports fans and Hollywood producers weak at the knees — could well founder.”

Here’s why:

Hedging Against the Return of the Dollar Comeback

The dollar’s suddenly back in vogue, but its amazing fourth-quarter comeback — the sort that would leave sports fans and Hollywood producers weak at the knees — could well founder.

After rebounding from a 2017 low earlier in September, the Bloomberg Dollar Spot Index is rallying from increased optimism about tax reform. The index has bullishly breached its 50-day moving average and has been flirting with resistance at the 1,168.32, August 15th high.

It’s not surprising that the dollar would try and stage a recovery. The question though is: how much further can it rally?

During its slump, investors shrugged off hawkish rhetoric from the Federal Reserve and rising geopolitical tensions, highlighted by North Korea. It appears, therefore, that a sustained rally will depend on the outcome for President Donald Trump’s proposed tax package.

There’s a lot of blanks to be filled in for the proposal, particularly with regards to how it’s going to be paid for.

It’s unlikely to be a smooth process. One need only look to the Obamacare repeal effort to see that.

Some market participants already appear to be preparing for short-term disappointment: dollar-yen risk- reversal have seen a rise in demand for downside puts this week despite spot rallying.

Whether this is to hedge an underlying long dollar position or to speculate on spot falling again is uncertain. Either way it does indicate that investors are thinking dollar-yen’s rally maybe stretched.

If investors see favorable progress being made toward a bill being passed, a test of 1,200 level by Bloomberg’s dollar index by year-end isn’t impossible. Signs of protracted delays may see a revisit of September’s lows.

The dollar’s delicately poised going into 2017’s final period. It remains to be seen if there’s a Hollywood ending here.